Trump Media shares soared Tuesday after the company announced it was debt-free and had more than $200 million in cash on hand.
Shares of Trump Media & Technology Group, which trades under the ticker DJT, rose about 6% on Tuesday, partially reversing Monday’s 21% decline. Year-to-date, the stock is up 198%.
“We are excited to operate as a public company and have access to the capital markets. Upon completion of the 2023 financial report related to the merger, Truth Social is now debt-free and has a bank balance of ¥200 million. We are taking full advantage of these opportunities to make Truth Social the quintessential free speech platform for Americans. We’re going to make it a platform,” CEO Devin Nunez said.
Investors were also likely relieved that Donald Trump posted $175 million bail in a civil fraud case without selling or pledging any stock. Trump owns nearly 60% of his parent company, Truth Social. The bail would allow Trump to appeal the civil judgment against him and prevent New York state authorities from seizing his assets to satisfy his judgment.
TMTG’s $7 billion market capitalization has raised eyebrows among some investors and Trump critics, but it has a long history of emerging technology startups achieving high valuations despite losses. Facebook acquired Instagram for $1 billion in cash and stock before any revenue was generated.
In connection with the SPAC merger, the company retired approximately $50 million in convertible bonds that had been issued to fund operations since Truth Social was founded in 2021. The move leaves the company debt-free and with $200 million in cash, the company said.
Last year, the company’s revenue was $4.1 million. The company did not disclose the number of users on its Truth Social platform. Donald Trump has around 7 million followers, which can be a good indicator of the total number of subscribers. President Trump has more than 87 million Twitter subscribers, suggesting Truth Social may have a lot of room to grow.
Critics argue that the current market value is inflated given the platform’s current size and last year’s sales. Bullish investors see the social media space as ripe for disruption after years of consolidation around a few dominant platforms. The company’s supporters argue that users and advertisers alike are looking for alternatives to existing platforms due to concerns about privacy, censorship and content homogenization.
Breitbart Business Digest argued that TMTG could be seen as a bet on social media and digital platforms fragmenting along political lines, similar to changes in cable news in recent decades. .
